Canberra-based sovereign cloud provider AUCloud is set to acquire three local technology companies for $30 million as it looks to grow its offerings in the face of a cash shortfall.
The ASX-listed company on Monday entered into binding agreements to buy PCG Cyber, Venn IT and Arado, at the same time as it launched a $30 million raise to fund the acquisitions.
The three acquisitions have been made to deliver “further business product, revenue and geographic diversification, and underpins the company’s pathway to profitability” next financial year, it said in a statement.
In January, the Canberra-based company commissioned a strategic review to “explore the optimal recapitalisation of AUCloud to fund future growth” due to dwindling cash reserves that are “likely to prove inadequate” at the current burn rate.
“Based on AUCloud’s most recent quarterly cash outflow of $2.7 million, the company has 1.7 quarters of funding available at the current burn rate,” AUCloud said in a quarterly update to the market.
PCG Cyber, a Canberra-based cybersecurity consulting firm that specialises in Australian government security advice and operations, will be acquired at a cost of $15 million, leaving another $15 million for the purchase of Venn IT Solutions and Arado.
Venn IT Solutions is a Queensland and South Australia-based managed service provider and professional consulting business, while Arado is a Queensland-based cloud and managed services provider.
In acquiring the three companies, AUCloud will add expertise in cybersecurity, cloud and professional services, which AUCloud chief executive and managing director Peter Maloney said would “position the company on a transformational growth trajectory”.
“This expansion not only broadens AUCloud’s product, revenue and geographic spread but also integrates the unique technologies, skills and expertise of highly skilled providers into our operations,” Mr Maloney said.
AUCloud intends to raise up to $30 million to fund the acquisitions, transaction costs and working capital. Mr Maloney indicated that the company is also planning future acquisitions in the cloud and cybersecurity space.
“The three acquisitions build on the sales momentum in the underlying cloud solutions business and create a platform for a scaled enterprise in a fragmented cloud and cyber security sector,” he said in a statement.
“The company intends to continue M&A activity to scale up quickly through further waves of accretive acquisitions to absorb high-quality cyber businesses.”
